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Full text of "The Interim"

THE INTERIM 

A Monthly Newsletter of the Montana Legislative Branch 



Volume XVI, No. 10 



Helena, Montana 



March 2008 



IN THIS ISSUE 

LEGISLATIVE COUNCIL 1 

NCSL AND CSG MEETINGS 2 

ENVIRONMENTAL QUALITY COUNCIL 2 

WATER POLICY COMMITTEE 2 

LEGISLATIVE FINANCE COMMITTEE 3 

ENERGY AND TELECOMMUNICATIONS COMMITTEE .. 3 

LEGISLATIVE AUDIT COMMITTEE 4 

CHILDREN, FAMILIES, HEALTH, AND HUMAN SERVICES 
COMMITTEE 6 

ECONOMIC AFFAIRS COMMITTEE 8 

EDUCATION AND LOCAL GOVERNMENT 10 

STATE ADMINISTRATION AND VETERANS' AFFAIRS 
COMMITTEE 10 

REVENUE AND TRANSPORTATION COMMITTEE 10 

THE BACK PAGE 13 

WHAT'S YOUR CLIMATE DOING? 13 

INTERIM CALENDAR 18 



THE INTERIM 

Montana Legislative Services Division 

Room 110, State Capitol 

PO Box 201706 

Helena, MT 59620-1706 

Phone: (406) 444-3064 

Fax: (406) 444-3036 

THE INTERIM is a monthly newsletter that 
reports on the interim activities of legislative 
committees, including the Legislative Council, 
the Environmental Quality Council, the Legisla- 
tive Finance Committee, the Legislative Audit 
Committee, and interim legislative committees 
and subcommittees staffed by the Legislative 
Services Division. Information about the commit- 
tees, including meeting schedules, agendas, 
and reports, is found at http://www.leg.mt.gov. 
Follow the "Committees" link or the "Interims" 
link to the relevant committee. The newsletter is 
posted on the legislative branch website on the 
first of each month (follow the "Publications" 
link). 



A Publication of 



Legislative 
Services 
Division 



LEGISLATIVE COUNCIL 

Council looks at revising legislative rules .. .The Rules subcommittee of the Legislative 
Council met on Jan. 28 to work on proposals for revising joint, House, and Senate 
rules. The council will consider some specific rule changes at its April meeting. The 
Legislative Council met on January 29. 

Council selects dates for caucuses, legislator training . ..The council has chosen Nov. 
1 9, 20, and 21 , 2008, for caucuses and legislator training. It also plans on providing 
training to all legislators with separate programs for new legislators and returning 
legislators. The Rules Committee meeting and training for committee presiding 
officers are planned for Dec. 15. These dates are, of course, subject to change. The 
council also reviewed several versions of the 2009 session calendar and it will 
continue to do so this interim. 

Delegation of legislative authority . ..Greg Petesch, director of LSD legal services, 
discussed the history of and legal issues related to the delegation of legislative 
authority to executive branch agencies through the administrative rulemaking 
process. Currently, legal staff and interim committees review all proposed 
administrative rules. The council concluded that review of existing rules is important 
in bill drafting and that legislators need more guidance in the delegation of authority 
in bill drafts. Legislation containing specific guidelines makes administrative 
rulemaking authority unnecessary. However, legislation cannot always be that 
specific because of changing technologies or other considerations; it makes more 
sense to give an agency the authority to adopt rules. Staff will be working on bill 
drafting guidelines on rulemaking and other informational and training tools on 
administrative rulemaking, including additions to the legislator handbook. 

Media access to legislative proceedings . ..The Legislative Council had a lively 
discussion with a panel of media representatives on open caucuses and media 
access to legislative proceedings. Greg Petesch discussed the legal history and 
status of open caucuses. Several panelists gave an historical perspective on how 
access to the Legislature as the people's branch of government was an important 
consideration for members of the 1 972 Constitutional Convention. 

The discussion included media access to the floor sessions and committee hearing 
rooms. Council members expressed their frustrations with logistics, especially in the 
Senate chamber. The council and media representatives agreed on the importance 
of preserving existing access, and council members assured those in attendance that 
there was no desire to restrict access of the media or the public. However, with 
expanding media pools and forms of communication, the council noted that media 
access should be balanced with maintaining decorum in the House and Senate 
chambers and in committee hearing rooms. 

Media representatives emphasized the value they place on their access to floor 
sessions and suggested some possible solutions to alleviate legislators' concerns, 
including media training and increased access to additional sound ports or media 
areas in the Senate gallery. Staff will follow up on the proposals for the council's 
consideration. 



March 2008 



THE INTERIM 



TVMT coverage, interim committee ENVIRONMENTAL QUALITY COUNCIL 



guidelines . ..Stephen IVIaly, Helena Civic Television, 
discussed plans to expand television coverage of legislative 
proceedings through TVMT. Council staff provided a memo 
on rules and guidelines for interim committees. The council 
has sent a letter to presiding and vice presiding officers of 
interim committees asking for their help in developing 
guidelines for interim committees and planning for the next 
interim. Finally, the council postponed until April 
consideration of legislator compensation and reimbursement. 

Voting system demonstration . ..Plans are underway 
to have the new House and Senate voting systems and 
displays installed this summer for the 2009 legislative 
session. The evaluation committee has invited a vendor to 
provide a demonstration in March, and legislators are invited 
to attend the demonstration of the proposed voting system 
technologies. Legislators may not ask the vendor questions, 
but they may provide comments and suggestions to the 
evaluation committee and will have ample opportunity to 
provide input on the proposed Web interface to the new 
systems. Legislators interested in attending the 
demonstration should contact Susan Fox at sfox@mt.gov or 
(406) 444-3066 for the specific date, place, and times. 

Council meets in April . ..The Legislative Council will 
meet April 1 in Room 102 of the Capitol. Agenda items 
include legislator training and caucuses; bill request 
deadlines; rules; revisiting the fiscal note study from last 
interim; annual and even-year sessions; and establishing 
budget initiatives for the 2009 session. 

For more information, visit the Legislative Council's 
webpage or contact Susan Byorth Fox at sfox@mt.gov or 
(406) 444-3066. 



NCSL AND CSG MEETINGS 

Applying for NCSL and CSG spring and summer 
meetings . ..A limited amount of money was appropriated for 
legislators to attend meetings sponsored by the National 
Conference of State Legislatures or the Council of State 
Governments. Legislators looking for financial assistance to 
attend an NCSL or CSG meeting must contact their 
legislative leader- Sens. Mike Cooney or Corey Stapleton or 
Reps. Scott Sales or John Parker-for approval (preferably 
in written form). If approval is granted, then submit a 
legislator reimbursement form with appropriate receipts to 
the Legislative Services Division c/o Jennifer Simmons. For 
forms or more information, contact Susan Byorth Fox at 
sfox@mt.gov or (406) 444-3064. 



Climate change survey draws good 
response . ..Armed with survey results and hundreds of public 
comments, the Environmental Quality Council continues to 
examine climate change. 

As part of its interim work, the EQC is reviewing the 
54 recommendations included in the "Montana Climate 
Change Action Plan: Final Report of the Governor's Climate 
Change Advisory Committee." The final report was released 
in November 2007. 

At a January meeting, the EQC agreed to invite the 
public to rank and comment on the 54 recommendations 
aimed at reducing greenhouse gas emissions in Montana. 
The recommendations are broken down into five categories: 
Residential, Commercial, Institutional, and Industrial; Energy 
Supply; Transportation and Land Use; Agriculture, Forestry, 
and Waste Management; and Cross-Cutting Issues. 

In order to better understand how the public feels 
about the recommendations included in that report, the EQC 
conducted a survey. Throughout the month of February, the 
public was invited to participate in the survey-and participate 
it did. Within the first 24 hours the survey was available 
online, 86 surveys were completed. Within the first week, 
close to 350 surveys were submitted. 

Survey results to be discussed at March 
meeting . ..EQC members also participated in the survey 
themselves, and an analysis of the results will include an 
examination of both responses from the public and 
responses from EQC members. That analysis will be 
presented to the EQC at a meeting March 1 0-1 1 in Helena. 

The Center for Climate Strategies, a nonprofit 
organization that worked with the Climate Change Advisory 
Committee, as well as a representative from the governor's 
office, also will be invited to the EQC meeting. 

Conservation easements . ..At its March meeting, the 
EQC will continue to work on HJR 57, a study of 
conservation easements on trust lands. A summary, that 
could serve as a type of brochure for the public, with basic 
information about conservation easements, will be presented 
to the council. 

The EQC meets March 1 0-1 1 in Room 1 02 of the 
Capitol. For more information, contact Joe Kolman at 
jkolman@mt.gov or (406) 444-9280 or Sonja Nowakowski at 
snowakowski@mt.gov or (406) 444-3078. The agenda and 
other materials are posted on the EQC webpage. 



WATER POLICY COMMITTEE 



Water marketing, other topics slated for March 
meeting . ..Though it often seems to flow freely, water is a 
property right, and therefore, a commodity. 



Property rights are often described as a bundle of 



March 2008 



THE INTERIM 



sticks associated witln a parcel of land. However, each stick 
has value independent of the bundle. While there are 
differences in how different rights may be marketed, a water 
right is one of those sticks. 

The 2007 Legislature asked the Water Policy Interim 
Committee to analyze water marketing and water 
reallocation options available in Montana, including leasing 
programs and the possibility of establishing a water bank. 

Speakers scheduled for the committee's March 1 2- 
13 meeting include representatives of agriculture and 
conservation as well as a free market advocate. 

Water marketing is notanewdiscussion in Montana. 
In 1984, the Legislature's Select Committee on Water 
Marketing published a voluminous report and several 
suggestions for future legislation. 

"These recommendations concern a strategy for a 
water policy for Montana in an interstate setting," wrote then- 
Sen. Jean Turnage, who chaired the panel. "This agenda is 
too important and too complex to be addressed by one 
interim committee or one legislative session. These issues 
significantly affect the future of Montana. The deliberations 
around them must be ongoing." 

Although those words were written nearly a quarter 
century ago, water markets are still in their infancy, 
according to Water Strategist, a newsletter that analyzes 
water policy, marketing, finance, legislation, and litigation in 
17 western states. 

"Water assets are not traded westwide; no indicator 
can measure overall activity in water markets," the 
newsletter said in its April 2006 issue. "The economic value 
of water depends upon the reliability of the underlying water 
right, quantity, quality, uses and the location and availability 
of competing sources of supply." 

However, in Montana and other states, competing 
demands for water are driving water marketing discussions. 
The 2007 Legislature passed House Bill 831 regulating 
groundwater appropriations in closed basins. Mitigation 
plans required under that statute may contain some aspect 
of water marketing. 

The March meeting will include a presentation of the 
growing communities doctrine, which gives special 
consideration to municipal water suppliers within the prior 
appropriation system for administering water rights. 

The committee also will continue discussing possible 
legislation on several topics. 

Meeting materials on the Internet . ..The meeting is 
March 1 2-1 3 in the state Capitol. An agenda, more meeting 
information, and background materials are available on the 
committee's webpage. For more information, contact Joe 
Kolman, committee staff, at (406) 444-9280 or 
jkolman@mt.gov 



LEGISLATIVE FINANCE COMMITTEE 

Finance committee meets in March . ..The Legisla- 
tive Finance Committee will meet Thursday and Friday, 
March 6 and 7, in Room 102 of the Capitol beginning at 1 
p.m. on Thursday and at 8 a.m. on Friday. The agenda and 
meeting reports are available on the Legislative Fiscal 
Division website at http://www.leg.mt.gov/css/fiscal/lfc.asp. 
For more information about the committee, contact Clayton 
Schenck at cschenck@mt.gov or (406) 444-2986. 

The following topics have been scheduled: 

Information technology management update 

State leasing policy and Corrections/DPHHS 

building plan issues 

Update on Montana Historical Society site selection 

Proposed statute change regarding authority to 

approve state land purchases 

Real-ID current status and May deadline 

Review of select programs including the Department 

of Revenue $14 million block funding and the State 

Hospital 

Study of budget and appropriation process 

Long-range planning study 

State Fund study 

Study of LFD products and services 

Report on Revenue and Transportation Interim 

Committee project of budget growth (graying of 

Montana) 

Status reports on LFC interim subcommittees and 

studies 

Performance measurement discussion 



ENERGY AND TELECOMMUNICATIONS 
COMMITTEE 

The Energy and Telecommunications Interim 
Committee approved draft legislation that eliminates the 
pending sunset of the electric Universal Systems Benefits 
program and agreed that a two-day meeting in the spring is 
needed to close in on the topic of carbon sequestration. 

Committee may recommend carbon sequestration 
legislation . ..The ETIC met Jan. 24 in Helena and started the 
day with an overview of the Interstate Oil and Gas Compact 
Commission's carbon sequestration model rules and 
regulations. Tom Richmond, administrator of the Montana 
Board of Oil and Gas Conservation, and Bonnie Lovelace, 
bureau chief for the Department of Environmental Ouality 
Water Protection Bureau, discussed aspects of existing 
Montana law and how they might be reviewed in developing 
carbon sequestration legislation. Following the presentation, 
ETIC members asked that the committee meet May 1 and 2 
to continue discussing recommendations on the subject. 



March 2008 



THE INTERIM 



Committee approves draft USB legislation . ..In 1 997 
SB 390 established the USB charge for all electric 
distribution utilities at 2.4 percent of 1995 electric utility 
revenues to begin Jan. 1 , 1999. The electric USB currently 
in law expires in December 2009. The committee approved 
draft legislation that removes the sunset and adds a 
provision requiring the ETIC to review the USB program 
each interim. 

Wind power integration on agenda . ..During the 
January meeting, a panel offered an overview of wind power 
integration in Montana and wind power topics specific to 
individual utilities. Seven speakers gave their perspectives 
on the costs and benefits of wind power development. 
Several PowerPoint presentations covering related topics 
ranging from generation interconnection to the importance of 
regulating electrical reserves were shown to the committee. 
These PowerPoint presentations are available on the ETIC 
webpage. 

State agency reports . ..Montana's Public Service 
Commission and the Department of Commerce Energy 
Infrastructure and Promotions Division also updated the 
committee on recent activities. The EIPD provided 
information on its work related to transmission, geothermal 
development, coal-to-liquids projects, and wind generation. 
The PSC is developing rules to implement portions of HB 25, 
the "Electric Utility Industry Generation Reintegration Act" 
approved by the 2007 Legislature. The proposed rules are 
available for review and a public hearing will be held on 
March 5 at the PSC offices. 

May meeting scheduled . ..The ETIC meets again 
May 1 and 2 in Helena. Please note that these dates are 
differentthan previously posted. Information on the ETIC and 
its studies can be found on the committee's webpage. For 
more information contact Sonja Nowakowski at 
snowakowski@mt.gov or (406) 444-3078. 



LEGISLATIVE AUDIT COMMITTEE 

The Legislative Audit Committee met Jan. 23 in 
Helena. The complete audit reports are available at 
http://leg.mt.gov/css/audit/default.asp.Thefollowing reports 
were issued: 

Financial Compliance Audits 

Statewide Audit (07-01) . ..This audit report 
documents the results of the Legislative Audit Division's 
(LAD) annual financial audit of the state of Montana's Basic 
Financial Statements and the Schedule of Expenditures of 
Federal Awards of the state of Montana for the fiscal year 
ended June 30, 2007. The basic financial statements were 
prepared by the Administrative Financial Services Division of 
the Department of Administration. The Schedule of 
Expenditures of Federal Awards was prepared by the 
Governor's Office of Budget and Program Planning. The 



audit was performed to express an opinion on the state's 
basic financial statements and the related opinion on the 
Schedule of Expenditures of Federal Awards. 

Auditing standards require the auditor to 
communicate control deficiencies over financial reporting 
identified based on an auditofbasic financial statements and 
considered to be significant or material. A significant 
deficiency affects management's ability to accurately process 
transactions. A material weakness is one or more significant 
deficiencies that adversely affect management's ability to 
fairly present its financial statements. The table below 
outlines the significant deficiencies and material weakness 
identified during this audit. 



Summary of Control Deficiencies 


Subject 


Significant 
Deficiency 


iVIateriai 
Weai<ness 


Page 


Improperly Recorded 
Infrastructure Asset Balances 
and Activity 


Yes 


Yes 


A-1 


Untimely Cash Reconciliations 


Yes 


No 


A-2 



Federal Single Audit (07-02) . ..This audit report 
documents the results of the Single Audit of the state of 
Montana for the two fiscal years ended June 30, 2007. The 
report contains the unqualified independent auditor's reports 
on the state of Montana's basic financial statements for the 
fiscal years ended June 30, 2007, and June 30, 2006, and 
the related schedulesofexpendituresof federal awards. The 
report also contains reports on the state of Montana's 
internal controls and compliance with federal and state laws 
and regulations, a schedule of findings and questioned costs, 
a corrective action plan, and a summary schedule of prior 
audit findings. 

Board of Investments (07-04) . ..This audit report 
documents the results of the annual audit of the Board of 
Investments in compliance with Article VIII, section 13, of the 
Montana Constitution, and 17-6-321 , MCA. The objectives of 
the financial audit included determining whether the board's 
financial statements presented fairly its financial position and 
results of operations at and for the period ending 
June 30, 2007, and the board's compliance with laws and 
regulations that have a direct and material impact on the 
financial statements. This report does not contain any 
recommendations to the board. 

The board chose to presentconsolidated investment 
pool financial statements forfiscal years 2006-07 ratherthan 
the separate pool statements as presented in previous years. 
This change in presentation provides the financial user a 
comprehensive view of all pooled investments. This report 
contains unqualified Independent Auditor's Reports for each 
of the following three sets of financial statements of the 
Board of Investments: Consolidated Investment Pool 
(consisting of Retirement Funds Bond Pool, Trust Funds 
Bond Pool, Short Term Investment Pool, Montana Domestic 
Equity Pool, Montana International Equity Pool, Montana 



March 2008 



THE INTERIM 



Private Equity Pool and IVIontana Real Estate Investment 
Pool), All Other Funds, and the Enterprise Fund. 

Public Employees' Retirement Board (07-08) . ..This 
audit report documents the results of the annual financial 
audit of the Public Employees' Retirement Board, for the 
fiscal year ending June 30, 2007. The objective of the 
financial audit was to determine if the Pension Trust Funds' 
Statements of Fiduciary Net Asset as of June 30, 2007, and 
the Statement of Changes in Fiduciary Net Assets for the 
year then ended are fairly presented. This objective included 
determining the system's compliance with state laws and 
regulations that are direct and material to the financial 
statements and the implementation status of two prior audit 
recommendations. An unqualified opinion was issued on the 
system's financial statements for the fiscal year ended June 
30, 2007. This audit report does not include any 
recommendations to the board. 

The previous financial-compliance report for the two 
fiscal years ending June 30, 2006, contained 
recommendations related to the actuarial soundness of three 
defined benefit retirement systems and reconciliation 
controls over external investments. At June 30, 2007, an 
actuarial valuation of the systems reported the amortization 
periods for all eight defined benefit systems administered by 
the board were less than the 30-year maximum amortization 
period. 

The change in the funding status of the three 
systems that were not actuarially sound at June 30, 2006, 
came about through a combination of changes enacted by 
the 2007 Legislature and higher than expected investment 
returns in fiscal year 2007. 

University of Montana (07-10) . ..This audit report 
documents the results of the annual financial audit of the 
University of Montana's consolidated financial statements for 
the fiscal years ended June 30, 2007. The objective of the 
auditwas to determine ifthe university's financial statements 
present fairly its financial position, changes in financial 
position, and cash flows as of June 30, 2007, and for the 
fiscal year then end. This objective included determining the 
university's compliance with laws and regulations having a 
direct and material impact on the financial statements. An 
unqualified opinion was issued on the university's 
consolidated financial statements, which means the reader 
can rely on the presented information. This report does not 
contain any recommendations to the university. 

Montana State University (07-1 1 ) ...This audit report 
documents the results of the annual financial audit of 
Montana State University's consolidated financial statements 
for the fiscal year ended June 30, 2007. The university 
requested this audit to provide timely audited financial 
statements to interested parties. The objective of the audit 
was to determine if the university's financial statements 
present fairly its financial position, changes in financial 
position, and its cash flows as of, and for the fiscal year 



ended, June 30, 2007. This objective included determining 
the university's compliance with laws and regulations having 
a direct and material impact on the financial statements. An 
unqualified opinion was issued on the university's 
consolidated financial statements, which means the reader 
can rely on the presented information. This report does not 
contain any recommendations to the university. 

Montana Guaranteed Student Loan Program (07- 
06).. .This audit report documents the results of the fiscal 
year 2006-07 financial audit of the Office of the 
Commissioner of Higher Education's Montana Guaranteed 
Student Loan Program (MGSLP) Federal Special Revenue 
Fund. An unqualified opinion was issued on the MGSLP 
financial statements, which means the reader can rely on the 
presented information. The report contains no 
recommendations to MGSLP. 

Office of Public Instruction (07-1 9) . ..This financial- 
compliance audit report contains the results of the audit of 
the Office of Public Instruction for the two fiscal years ended 
June 30, 2007. An unqualified opinion was issued on the 
financial schedules of OPI for the two fiscal years ended 
June 30, 2007. The reader may rely on the financial 
information presented in the financial schedules and the 
supporting data on the state's accounting system. 

Montana State Fund (07-05) . ..This financial audit 
report documents the results of the audit of the Montana 
Sate Fund New Fund (MSF) and the Old Fund for the fiscal 
year ended June 30, 2007. Unqualified opinions were issued 
on the statements for MSF and the State of Montana-Old 
Fund contained in this audit report. This report contains one 
recommendation to MSF related to improving internal 
controls for financial reporting. 

Information System Audits 

State Web Server Security Audit (08DP-02) ...The 
Department of Administration is responsible for state network 
enterprise policy-making, including state web servers. The 
state's web servers are vital in providing access to state- 
provided programs and services as well as non-public 
agency applications and data. Without proper controls, 
unauthorized access to any data for any services offered 
through state web servers could be allowed. 

The Legislative Audit Division, Information Systems 
audit team, performed an audit to evaluate state controls in 
place to mitigate unauthorized web server activity. The report 
contains two multi-part recommendations for the Department 
of Administration to define state web server responsibilities 
in policy: notify agencies of those responsibilities, comply 
with state enterprise policy to check state web servers before 
the servers become available to the public, and to scan for 
unauthorized web servers. 



March 2008 



THE INTERIM 



Statewide Accounting, Budgeting, and Human Resource 
System, SABHRS (08DP-03) ...TIie Statewide Accounting, 
Budgeting and Human Resource System (SABHRS) is an 
enterprise computer application implemented by the state of 
Montana to assist state agencies and the Montana University 
System to record the disposition, use, and receipt of public 
money and property in accordance with state law (section 
1 7-1 -1 02, MCA). SABHRS also assists in the administration 
of human resource (HR) information, including the 
generationof a bi-weekly payroll. SABHRS Services Bureau 
(SSB) at the Department of Administration (DOA) is 
responsible for the general maintenance, operation, and 
security of SABHRS. 

Information Systems auditors addressed general 
security controls in place to ensure the security of business 
processes. The report focuses on general controls; 
specifically, identifying areas where DOA can improve 
controls over user access to the SABHRS application. Two 
recommendations for development and implementation of 
review procedures to ensure conflicting access roles are 
segregated and SSB programmers do not have access to 
modify programming code and database tables in the 
production environment. 

Performance Audit 

State Grain Laboratory Operations and Future 
Viability, Department of Agriculture (07P-10) ...The 
Legislative Audit Division conducted a performance audit of 
the State Grain Laboratory (SGL) Operations. The 
recommendations address the need for an additional or 
alternative funding source if SGL is to be viable in the future. 
To address improvements in SGL's efficiency and 
effectiveness, the audit recommends the Department of 
Agriculture implementcomprehensive managementcontrols 
at SGL. The audit also recommended the department 
increase enforcement of section 80-4-711, MCA. By 
obtaining a stable funding source, implementing 
management controls, and enforcing statutory provisions, 
improvements could be made in SGL's operations. 

A summary of the findings is available on the 
Legislative Audit Division's webpage at www.leg.mt.gov. In 
the left hand column, click on "Audit" and in the drop-down 
box click on "Audit Reports". The summary is listed under 
the January 2008 audits (07P-1 0). 

Contract Audit 

Dawson Community College (07C-09) ...This 
financial-compliance audit report contains the results of the 
audit of Dawson Community College for the fiscal year 
ended June 30, 2007. The audit was conducted by Denning, 
Downey & Associates, under contract between the firm and 
the Legislative Audit Division. The report contains an 
unqualified opinion on the financial statements on the 
financial statements contained in the report. This means the 
reader may rely on the financial information presented. 



CHILDREN, FAMILIES, HEALTH, AND HUMAN 
SERVICES COMMITTEE 

Legislative audit identifies gaps in EMS 
services . ..Emergency medical services (EMS) providers in 
Montana responded to more than 72,000 calls in 2006, with 
the average time required to transport a patient from the 
scene to the hospital door ranging from about nine minutes 
for urban EMS providers to more than 28 minutes for rural 
responders. More than half of the calls resulted from medical 
emergencies, while only 16% stemmed from motor vehicle 
crashes. 

Those were among the highlights of a presentation 
by the Legislative Audit Division, which is in the midst of a 
performance audit of EMS services. The audit dovetails with 
the committee's SJR 5 study of the challenges facing 
Montana's EMS system. 

At the January meeting of the Children, Families, 
Health, Human Services Committee, Misty Wallace of the 
Audit Division gave committee members a thorough 
overview of what the audit has found to date. 

She noted that while Montana has more than 4,600 
licensed emergency medical technicians, only 57 percent are 
estimated to be actually practicing EMS care at the time. 
Others are maintaining their licenses, but are either not 
currently working or volunteering or are not available during 
peak EMS traffic hours The audit information also showed 
that around-the-clock advanced care is available primarily in 
Montana's more urban areas. Ninety-five percent of 
Montana's urban population is within 30 miles of an 
Advanced Life Support unit that operates 24 hours a day, 
seven days a week, and 93 percent of the urban population 
is within 10 miles of such an EMS unit. However, just 55 
percent of the state's rural residents have a similar unit within 
30 miles of their home, while only 27 percent have one within 
10 miles. 

John Ungaretti of Montana Healthcare Billing, a 
company that handles billing for a number of both paid and 
volunteer EMS units, described the difficulties that EMS 
providers face in receiving payment for services, particularly 
for services to people insured through government programs. 
Medicare and Medicaid reimburse only a certain percentage 
of the charges, while the state's Children's Health Insurance 
Program, or CHIP, doesn't cover ambulance costs at all. 

Nels Sanddal, who heads up the Critical Illness and 
Trauma Foundation in Bozeman, told the committee that 
Montana's EMS system is based "largely on good will," 
operated by volunteers who are committed to serving their 
communities. He predicted, however, that without significant 
changes, volunteer EMS systems will be gone in 10 years 
becauseofthechanging demographics of rural Montana. He 
suggested that the state should support the "costs of 
readiness," which include the equipment that local providers 
must purchase and the costs of keeping volunteers trained. 
Many states have a grant program for local EMS agencies, 
he noted, as well as tax incentives, retirement programs, and 
formal recruitment and retention efforts for volunteers. 



March 2008 



THE INTERIM 



SJR 1 5 subcommittee continues health care system 
review . ..The subcommittee appointed to seek resolution of 
conflict-of-interest concerns that hospitals have with health 
care providers who have investments in separate, perhaps 
competing facilities heard from stakeholders at a Jan. 24 
meeting and reviewed a bill draft at a Feb. 1 1 meeting. At 
both meetings, physicians and other health care providers 
expressed their fears that hospitals could freeze them out of 
their practices by economically discriminating against them 
if they had dual work places, particularly if they had an 
economic interest in such for-profit facilities as ambulatory 
surgery centers or imaging centers. Nonprofit community 
hospital administrators noted that conflicts of interest can 
impact revenues by sending healthier and better insured 
patients to the for-profit facilities and sending patients 
needing more care to be treated at a hospital. 

The subcommittee-made up of Sen. Dan Weinberg 
and Rep. Ernie Dutton-is reviewing a bill draft (LC0038) to 
resolve both the conflict-of-interest and the economic 
discrimination concerns. 

The subcommittee will meet again on March 1 7 to 
discuss the proposed bill draft and to discuss a related study 
proposal to determine whether to continue a moratorium on 
specialty hospitals, allow the specialty hospitals but with 
more restrictions on their licensing, or ban specialty 
hospitals. 

Rep. Edith Clark, presiding officer of the Children, 
Families, Health, and Human Services Committee, has 
asked that the subcommittee provide recommendations to 
the full committee on March 1 8. 

Also on March 18, the full committee will discuss 
whether to define in state law the community benefits that 
nonprofit community hospitals provide, partially in exchange 
for the income and property tax exemptions they receive. 
New Internal Revenue Service regulations require more 
definitive listing of community benefits under IRS Form 
990H. Most Montana hospitals use guidelines from the 
Catholic Hospital Association and VHA Inc. that spell out 
acceptable offsets, such as uncompensated care, including 
the difference between Medicaid reimbursements and 
hospital costs. 

The full committee also will consider how to proceed 
with making hospital and insurance pricing more readily 
available and understandable to the public and with 
implementing a statewide electronic medical record system. 
Other prospective SJR 1 5 topics include a discussion of end- 
of-life alternative care, such as hospice. 

For more information, visit the SJR 15 area of the 
committee's website, under Assigned Studies, or contact 
SJR 15 staffer Pat Murdo at (406) 444-3594 or 
pmurdo@mt.gov. 

Mental health study contract awarded . ...The 
committee awarded a contract for a mental health study to 
DMA Health Strategies, a Massachusetts-based firm that 

has worked with a number of states on their mental health 
systems. 

DMA was one of seven companies that submitted 



proposals for conducting a three-pronged study. The tasks, 

and DMA's plans for completing them, are: 

Conduct a needs assessment and resource 
mapping of Montana 's publicly funded mental health 
services to identify any gaps in services or in the 
provider community. DMA will collect and analyze 
data compiled by various state agencies to 
determine who is being served in the publicly funded 
mental health system and also will contact 
stakeholders through interviews, focus groups, and 
surveys to identify services that may be needed but 
currently are not provided. 

Inventory the federal, state, and local funds currently 
being spent on publicly funded mental health 
services and identify additional resources that may 
be available. As part of this task, DMA will evaluate 
the rules associated with each funding source and 
the legislative, regulatory, and other challenges to 
obtaining or re-directing the funds. 

I dentify ways in which Montana 's existing publicly 
funded mental health services could be better 
integrated or coordinated. DMA will use the results 
of its interviews and other work to propose ways to 
better integrate existing services. It also will review 
systems in other states to identify elements that may 
be used for a model system in Montana. 

DMA officials will attend the committee's March 1 7- 
18 meeting to discuss the work plan for the study in more 
detail. 

Drafting of corrective legislation requested . ...The 
committee requested the drafting of three bills to correct 
inconsistences in existing law: 

LC 41 would remove an incorrect reference to 
prescription drug laws in 53-32-205, MCA. 

LC 42 would repeal the termination date established 
in previous sessions for the so-called "hospital bed 
tax," or the fee assessed for each day a person is in 
the hospital. The 2007 Legislature approved the 
extension of the fee beyond its June 30, 2009, 
sunset date by passing SB 525, but amendments 
added to the bill did not properly remove the 
termination date set in prior session law. 

LC 43 would revise 20-5-503, MCA, to clarify that 
the affidavit that allows a caretaker relative to enroll 
a child in school can be valid through the end of the 
school year. 

The draft legislation is available on the committee's 
webpage and will be subject to public comment at the 
committee's March 17-18 meeting. The committee may 
approve the bill drafts or request further revisions, based on 
public comment. 



March 2008 



THE INTERIM 



8 



Montana State Hospital concerns . ..Joyce DeCunzo, 
administrator of the Departmentof Public Health and Human 
Services Addictive and Mental Disorders Division, told the 
committee that the number of patients at the Montana State 
Hospital continues to exceed the number for which it is 
licensed. The facility is licensed for 1 89 patients, but is over 
that amount by approximately 20 to 30 people on any given 
day. 

DeCunzo said the agency is looking at what it might 
be able to do to develop more intensive services at the 
community level as a way to reduce the population at the 
State Hospital. 

Department of Public Health and Human Services 
updates . ..DPHHS Director Joan Miles and Deputy Director 
John Chappuis brought committee members up to speed on 
new developments within the department, including: 

Increases in enrollment for the Children's Health 
Insurance Program, or CHIP. The 2007 Legislature 
increased the income eligibility level forthe program 
from 150 percent to 175 percent of the federal 
poverty level. That increase, along with additional 
outreach efforts, had brought 6,219 additional 
children into the program by mid-January. 

New staff members for the Child and Family 
Services Division. The 2007 Legislature approved 
hiring 15 new caseworkers for the division. Ten of 
those positions have been filled, while the remaining 
5 will be filled in the next fiscal year. 

The issuance of a request for proposals for a new 
community health center, to provide health care 
primarily to uninsured and underinsured Montanans. 
The proposals were due at the end of February, and 
a contract should be awarded by May 1 . 

Decreases in the number of Montanans served by 
the Medicaid program. About 78,000 people are 
served by the program right now, compared with 
more than 82,000 in January 2006. However, 
Chappuis cautioned that the numbers could 
increase if the state's economy takes a downturn. 

Stay tuned . ...The committee will meet March 1 7-1 8 
in Room 137 of the Capitol, beginning at 8 a.m. on March 17 
with a meeting of the SJR 15 subcommittee. The agenda 
and other materials will be posted on the committee's 
webpage as they become available. Please contact Sue 
O'Connell at (406) 444-3597 or soconnell@mt.gov for more 
information about committee activities. 



ECONOMIC AFFAIRS COMMITTEE 

The Economic Affairs Interim Committee met on 
Feb. 7 in Great Falls as part of its continuing outreach to 
local communities. Meeting topics included value-added 



agriculture and workers' compensation. The meeting 
showcased changes on the MSU Great Falls campus, as the 
EAIC was the first group to meet in the newly renovated 
Heritage Hall. 

SJR 13 study meets the Golden Triangle . ..Panelists 
on value added agriculture echoed concerns raised earlier in 
Miles City, but with special emphasis on grains in the Golden 
Triangle. The panel demonstrated that processing Montana's 
agricultural products in-state can bring economic gain, 
whether the operation is small, medium, or large. David 
Tweet of Anheuser-Busch came equipped with numbers on 
the large side, saying that in 2006 nearly 70 percent of barley 
grown in Montana was used for malt. Anheuser-Busch has 
contracted with well over a thousand barley growers. These 
contracts have an impact nationally because Montana-grown 
barley is used in one of every five bottles of Anheuser-Busch 
beer sold in the U.S. Committee members were presented 
with a sampling of this quality crop (although it had not, as 
yet, added value through fermentation). Mark Black, of 
International Malting in Great Falls, represented medium- 
sized operators and explained their relationship with not only 
Anheuser-Busch, but also with other national and 
international brewers, distillers, and food companies. 

David Oien from Timeless Seeds, a smaller grower 
and marketer of flax, lentil, and other seeds, discussed his 
firm's growth over the past 20 years and warned that 
Montana plains communities need help to maintain or revive 
past vitality. 

Randy Gilbertson of Pasta Montana said that other 
states, like North Dakota and Minnesota, have nearby 
suppliers that provide food processors with cardboard boxes, 
pallets, or other supplies necessary for getting their products 
to market. Stating that "industry breeds industry", Gilbertson 
recommended more resource support for farm-to-market 
production. Sam Schmidt of Montana Milling said that the 
supply of organic grain is not keeping up with demand, 
noting that organic grains make up less than 1 percent of 
Montana's farm acreage. He suggested that more 
information is needed to help interested farmers make the 
transition to growing organic grains. 

The presenters recommended that programs at 
Montana's colleges of technology could be developed to train 
people to mill machines or do production or maintenance 
engineering. They also discussed concerns about shipping 
costs out of Montana and the lack of small-unit shipping 
options. 

At the next meeting the committee will hear more 
about Montana's Growth through Agriculture grants, options 
for marketing, and work force training options. Reps. Bill 
Thomas and Mike Milburn said they would work with the 
presenters at the Great Falls meeting to follow up on their 
suggestions for possible legislation. 

Workers' compensation . ..The afternoon presentation 
on workers' compensation demonstrated the continued 
interest in this topic among several legislative committees. 
The EAIC has two liaisons to the Montana State Fund 
appointed by Rep. Scott Mendenhall. Reps. Mike Milburn 



March 2008 



THE INTERIM 



and Bill Thomas are attending State Fund meetings and 
reporting back to the full committee. 

Jerry Keck, division administrator with the 
Employment Relations Division at the Department of Labor, 
presented data showing that the injury rate in Montana is 57 
percent higher than the national average, and return to work 
time is 67 percent longer. Since state agencies make up 
nearly one-third of State Fund's clients, committee members 
asked how state agencies were faring on these two areas. 
Connie Welsh, who oversees state workers' comp claims in 
the Department of Administration, said that the numbers in 
state government were, unfortunately, no better than small 
operators around the state. 

Welsh unveiled a new initiative at the state level by 
introducing Lance Zanto who has been brought in to focus 
on safety and ensuring employees are able to return to work 
and get back to healthy and productive lives. Zanto said the 
effort is to let employees know they are needed back at 
work. He said occupational health studies show that being at 
home and idle can be counterproductive to healing. He told 
the committee that by going back to work, even in a limited 
capacity, people are able to keep the personal pride of daily 
achievement, have social interactions, and maintain the 
economic situation for their family, all of which are important 
to the mental component of recovering from an injury. 

Committee members wanted to know what this 
meant in "real terms," and were given the answer through 
the recent tragic bus accident involving many Department of 
Corrections personnel. Zanto, acting as a case manager, 
secured positions in other state agencies for employees that 
were well enough to return to work, thus treating state 
government as one entity. "Having someone at home any 
longer than is necessary because we don't make an effort is 
a lose-lose situation. Getting people back in the game is 
good for the employee, good for the employer, and good for 
the public trust," Zanto said. 

Lanny Hubbard, president and CEO of the Montana 
State Fund, talked about State Fund operations. He said the 
organizational structure and operations of MSF are akin to a 
private insurance carrier in order to meet businesses' needs. 
Hubbard explained how rates are set and how rates set by 
MSF differ in certain areas from private insurance 
companies. He also gave an update on the Old Fund. 
Looking into the future, Hubbard said the greatest area of 
concern isthe volatility of court decisions and the impact this 
can have on claim benefits. 

HJR 48 subcommittee . ..At its Feb. 6 meeting, the 
subcommittee studying health insurance reforms to expand 
coverage of the uninsured in Montana heard from an 
attorney involved with the Massachusetts health care 
reforms and a health care policy analyst for the Heritage 
Foundation. 

Attorney Rick Szczebak, who helped develop a 
Section 125 plan that authorizes pre-tax deductions for 
contributions toward employee health insurance under the 
Massachusetts Commonwealth Connector, reviewed the 
federal requirements for a Section 1 25 plan. He said that all 
participants in the plan must be employees, which means 



that the self-employed or an owner of an S corporation are 
not allowed to participate. 

Ed Haislmaier, of the Heritage Foundation, 
discussed what states can do to implement health insurance 
reforms. He noted that a perfect model does not exist. For 
states interested in implementing the equivalent of Section 
125 options, the choices range from setting up a 
bureaucracy to handle the regulatory burden to using 
electronic systems and payroll withholding to provide 
insurance through the Internet. He said one benefit of the 
Massachusetts Insurance Connector is that it allows people 
who go in and out of jobs to buy and retain insurance 
coverage regardless of whether they are employed or 
between jobs. 

State Auditor John Morrison discussed the children's 
health initiative that has been submitted to the secretary of 
state. The Healthy Montana Kids Plan Act, which has not yet 
been authorized for signature gathering to be placed on the 
ballot, would seek to enroll as many as 30,000 Montana 
children whose parents earn under 250 percent of the 
federal poverty level. Coverage would be through Medicaid, 
theChildren's Health Insurance Program, or payment toward 
their parent's health insurance plan. 

Expanding public health programs . ..The HJR 48 
subcommittee also reviewed options to expand public health 
programs like Medicaid, Insure Montana, and the Children's 
Health Insurance Program. John Chappuis, deputy director 
of the Department of Public Health and Human Services, 
reviewed waivers that Montana has used under Medicaid to 
expand coverage of eligible populations, especially to reduce 
the waiting lists for existing programs. He suggested that 
eligibility could be expanded by increasing the percentage 
above the poverty level. For example, in the 2007 session, 
the Legislature expanded eligibility for CHIP to 175 percent 
of the federal poverty level. Most states are at 200 percent of 
the federal poverty level. Another option would be to 
maintain seriously emotionally disturbed children on 
Medicaid until they reach the age of 21 . Currently coverage 
ends at age 18. 

The HJR 48 subcommittee has not yet decided 
whether to move the study to the full Economic Affairs 
Committee or have one more meeting to consider options to 
decrease the number of uninsured Montanans. The next 
meeting of the Economic Affairs Committee is in May. More 
specifics will be available in the April issue of the interim 
newsletter. 



For more information about the Economic Affairs 
Committee contact Andrew Geiger, committee staff, at (406) 
444-5367 or angeiger@mt.gov. 



March 2008 



THE INTERIM 



10 



EDUCATION AND LOCAL GOVERNMENT 

Two subcommittees (K-12 and PEPB 
subcommittees) of the Education and Local Government 
Interim Committee will meet on Thursday, March 13, and the 
full committee will meet on March 1 4. 

K-1 2 Subcommittee . ..The K-1 2 Subcommittee meets 
Thursday, March 1 3. Following a brief overview of the Feb. 
5 court filing by the Montana Quality Education Coalition, the 
subcommittee will review funding adjustments made in 
neighboring states for their small, remote, or shrinking school 
districts. The subcommittee will consider the financial impact 
if these adjustments were implemented in Montana. Staff of 
the Revenue and Transportation Committee will report on 
that committee's SJR 31 study of taxation and school 
funding. The Department of Administration will report on the 
statewide school facilities inventory that is now underway. 
Finally, the subcommittee will examine the Indian education 
achievement gap. 

Education and Local Government Interim 
Committee.. .The full ELG Committee will meetFriday, March 
4 at 8:30 a.m. Following subcommittee reports, other 
agenda items include: 

court filing by the Montana Quality Education 

Coalition; 

antiquated statutes related to local governments; 

administrative efficiencies at the school district level 

(Montana and other states); 

funding adjustments for small, remote, or shrinking 

schools undertaken by neighboring states; 

taxation and school funding; 

distance learning; 

scholarship plans; 

As always, there will be opportunity of public 
commentduring the meetings. For more information, contact 
Casey Barrs, ELG Committee staff, at (406) 444-3957 or 
cbarrs@mt.gov. 



STATE ADMINISTRATION AND VETERANS' 
AFFAIRS COMMITTEE 

February meeting . ..The State Administration and 
Veterans' Affairs Interim Committee met on Feb. 22 to 
consider topics that have been on the committee's agenda 
this interim: election laws, including mail ballot elections and 
the counties' resource needs for conducting elections; 
Montana's public employee retirement systems; Montana 
military personnel, particularly veterans who have served or 
are serving in Afghanistan or Iraq; administrative rules; and 
committee administration and budgeting forthe nextinterim. 

Coverage of the meeting will appear in the April 
issue of the interim newsletter. 



Next meeting scheduled for late April . ..The 
committee is scheduled to meet next on Monday and 
Tuesday, April 28 and 29. Most of the meeting will be 
devoted to considering changes to the state's public 
employee retirement systems that may be proposed by 
stakeholders in the systems. 

The committee requests stakeholders to submit 
retirement-related proposals by early April (or sooner if 
possible) on the form titled "Proposal for Retirement Plan 
Legislation" and available on the SAVA web page, under the 
"Qther Committee Activities" heading. The Public Employees' 
Retirement Board and the Teachers' Retirement Board will 
each present its proposed changes to the retirement systems 
at the committee's June 30 meeting. 

For more information contact Dave Bohyer, 
committee staff, at dbohyer@mt.gov or (406) 444-3064, or 
Rep. Franke Wilmer, presiding officer, at (406) 599-3619. 



REVENUE 
COMMITTEE 



AND TRANSPORTATION 



Study subcommittees meet for first time . ..Last 
December the Revenue and Transportation Interim 
Committee created the SJR 31 subcommittee and the HB 
488 subcommittee. The subcommittees met for the first time 
on Feb. 7. The full committee met the afternoon of Feb. 7 
and Feb. 8. 

SJR 31 study subcommittee . ..SJR 31 is a study of 
the future viability of the use of property taxes to fund K-12 
education. The study was requested because of concerns 
about changing demographic patterns in Montana, 
particularly the aging population and school-aged children, 
and disparate school funding property tax burdens faced by 
taxpayers across the state. 

At its February meeting, the SJR 31 subcommittee 
reviewed several background reports. Denise Ulberg gave a 
PowerPoint presentation on the basics of school funding. In 
fiscal year 2008, school district budgets statewide amounted 
to a little over $1 .3 billion. General fund budgets accounted 
for about $911 million of that total and retirement $119 
million. Ulberg discussed the mechanics of school district 
general fund budgeting. She noted that school enrollment 
has been declining steadily since the mid 1990s. She also 
discussed the school retirement funds, debt service funds, 
and transportation funds and the use of nonlevy revenue 
(e.g., oil and gas production taxes, coal gross proceeds 
taxes, and state reimbursements tied to tax law changes). 

Montana State University Economists Myles Watts 
and Doug Young of Montana discussed demographic and 
socioeconomic trends in Montana. Between 1 940 and 2000, 
people 65 years old and older increased from 6 percent of 
the state's population to 1 3 percent, while those 1 7 years old 
and younger fell from 31 percent to 26 percent. By 2030, the 
older group will account for 26 percent of the state's 
population and the younger group for 20 percent. These 
changes may have a significant effect on school funding, the 



March 2008 



THE INTERIM 



11 



demand for health care and other services, and state and 
local revenue. Watts and Young also discussed income and 
expenditure patterns by age groups. The PowerPoint 
presentation is available on the RTIC webpage under the 
SJR 31 subcommittee. 

Dan Bucks, director of the Department of Revenue, 
discussed the prospects of a sales tax given the trend 
toward a service economy. Larson Silbaugh, DOR, 
described the capabilities of the department's sales tax 
model. 

HB 488 subcommittee . ..The Departmentof Revenue 
will be finishing up this year the reappraisal of agricultural 
land, residential and commercial land and improvements, 
and forest land. The new values will go into effect in 2009. 
Under current law, the department is required to revalue 
these types of property every six years. Because the 
reappraised value of residential property, and to a lesser 
extent commercial property, increased significantly during 
the last two reappraisal cycles, the Legislature phased in the 
increase in values, reduced property tax rates, and provided 
phased-in property tax exemption. The purpose of the HB 
488 study is to consider options, if any, the Legislature may 
adopt to mitigate increases in reappraised values. The 
subcommittee is operating under a slight handicap because 
data on new values will not be available until later this year. 

Jeff Martin, subcommittee staff, presented a history 
of cyclical reappraisal in Montana since the Department took 
over reappraisal under the 1972 Constitution. He also 
discussed some property tax mitigation strategies that the 
subcommittee may consider during the interim. The reports 
are available on the RTIC webpage under the HB 488 
subcommittee. 

The Department of Revenue discussed the results 
from the 1 997 and 2003 reappraisal cycles and provided an 
update on the current cycle. The average change in 
residential property values was 44 percent in 1 997 and the 
average change in 2003 was 20 percent. The disparity in 
average values for counties was much less in 2003 than in 
1 997, and the department expects the 2009 disparity to be 
lower than 2003. Dan Buck, director or the Department of 
Revenue, told the subcommittee that effective reappraisal 
mitigation strategies will prevent property taxes from 
increasing on a statewide basis. 

Miffed overTIFs? ...On Thursday afternoon, the full 
committee took up the question of the Department of 
Revenue's proposed rules related to tax increment finance 
districts. Lee Heiman, staff attorney, told the committee that 
the department has rulemaking authority in relation to the 
property tax operation of tax increment financing, but not in 
the creation or administration of the local government 
districts that utilize tax increment financing. Alec Hanson, of 
the Montana League of Cities and Towns, discussed the a 
background report on tax increment finance districts. Bruce 
McCandless, of Billings, and Chris Behan, of Missoula, 
discussed boundary changes within a TIF district, and 
Colleen Balzarini, of Great Falls, discussed base year 
taxable value. 



Department of Revenue reports . ..Dan Bucks, 
director of the Department of Revenue, reported on the 
property tax settlement with PPL Montana for tax years 
2003-2007. The Montana Supreme Court had recently 
upheld the department's property valuation of the company 
for tax years 2000-2002. PPL Montana will pay 94 percent, 
or$1 14 million,of assessed property taxes for the eight-year 
period. Bucks also discussed tax compliance measures, 
property reappraisal, the $400 property tax rebate, and 
certain provisions of the most recent economic stimulus 
proposal in Congress. 

HJR 61 study of federal income tax 
conformity . ..Montana generally conforms its individual 
income tax and corporation license tax laws to federal 
income tax provisions. Lee Heiman, staff attorney, told the 
committee that this type of conformity may be an 
unconstitutional delegation of legislative authority to the 
federal government. At the April meeting, the committee will 
review two bill drafts to revise how Montana conforms with 
federal tax law. The first would provide for a fixed-date 
conformity to federal law that could be changed only by 
positive legislative action. The second would also provide for 
fixed-date conformity but would conform to federal tax law 
changes enacted between Montana's legislative sessions. 

Anotherpart ofthestudywould look at consolidating 
and reorganizing certain common elements of Montana's 
individual income tax and corporation license tax laws. 
Heiman said that committee staff and the Department of 
Revenue will work together on this part of the study. He told 
the committee that the reworking of the tax laws would not 
involve any policy changes. 

Down the road . ..Representatives from Billings and 
Missoula talked about meeting the transportation needs of 
their cities and concerns about working relationships with 
the Montana Department of Transportation. Ed Ulledalen, 
Billings council member and deputy mayor expressed 
concern about making advanced payments of local match for 
transportation projects in Billings. He also said that some 
cities are better able than MDT to design and build projects 
and should be allowed to do so. 

Bruce Bender, chief administrative officer, said 
transportation project delays have a significant effect on 
Missoula because of rising construction costs. 

Jim Lynch, director, MDT, told the committee that 
MDT began requiring the advance payment of local match in 
response to a legislative audit. 

MDT reports . ..Jim Lynch, MDT, reported on ethanol 
production tax credits, the status of construction projects on 
Highway 2, and an update on highway construction projects 
from 2008 to 2012. 

Committee to meet in April . ..The Revenue and 
Transportation Committee will meet April 17 and 18 in 
Helena. The SJR 31 subcommittee and the HB 488 
subcommittee will meet April 17. For more information 
contact Jeff Martin, committee staff, at (406) 444-3595 or 



March 2008 THE INTERIM 12 

jmartin@mt.gov. 



March 2008 



THE INTERIM 



13 



THE BACK PAGE 

WHAT'S YOUR CLIMATE DOING? 

By Joe Kolman 
Legislative Researcln Analyst 

When my dad and I talk on the phone, one of us invariably 
asks, "What's your weather doing?" 

He's in Harlowton and I'm in Bozeman or Helena so his 
weather is often doing something different than mine- 
especially since the fresh air is usually blowing hard in Harlo. 

Monosyllabic men like us can discuss the weather for hours. 
But lots of folks are talking about the weather as it relates to 
climate change. The 2007 Legislature debated a number of 
climate-related bills. The Environmental Quality Council is 
studying climate change this interim and may endorse 
legislation. And it is likely the climate will be much discussed 
in the 2009 session. 

WHAT IS CLIMATE? 

Debates about climate change are often complex. And in the 
heat of the Legislature, there isn't always time for the basics. 

First, it's important to know the difference between climate 
and weather. The weather is the short term state of the 
atmosphere. One warm day in February is weather. The 
climate is the long term average weather-often spanning 
several decades-of a region that takes into account typical 
weather patterns, the frequency and intensity of storms, cold 
spells, and heatwaves. 

Climate change is a term that includes any significant 
change in measures of climate. 

Climate change may result from: 

natural factors, such as changes in the sun's 
intensity or slow changes in the earth's orbit around 
the sun; 

natural processes within the climate system such as 
changes in ocean circulation; and 

human activities that change the atmosphere's 
composition, including the burning of fossil fuels, or 
changes to the land surface such as deforestation, 
reforestation, urbanization or desertification.^ 



and is absorbed by the Earth's surface-some of that energy 
is then emitted back to the atmosphere as heat. Greenhouse 
gases trap that heat, which would otherwise be released into 
space, raising the temperature of the atmosphere and, 
subsequently, the Earth's surface. This is called the 
greenhouse effect. Primary greenhouse gases include:^ 

Water vapor contributes the most to the greenhouse 
effect and occurs in the atmosphere as a result of 
the natural cycle of water. 

Carbon dioxide also cycles naturally between the 
atmosphere and living organisms. Plants and algae 
remove CO2 from the atmosphere via 
photosynthesis, while all living things release CO2 
via respiration (i.e., breathing). Carbon dioxide also 
cycles back and forth between water on the Earth's 
surface (freshwater and the oceans) and the 
atmosphere. In addition to these natural processes, 
humans release large quantities of CO2 to the 
atmosphere by burning fossil fuels, deforestation, 
and other industrial processes. 

Methane is a natural byproduct of decomposition, 
but significant quantities are also produced by 
agriculture and animal husbandry as well as by 
fossil fuel production. 

Nitrous oxide is released naturally from terrestrial 
soils and oceans, but substantial quantities are also 
generated from the use of nitrogen fertilizers in 
agriculture and through some industrial processes. 

A number of other natural and man-made gases 
also contribute to the greenhouse effect, including 
tropospheric ozone and industrial gases such as 
halocarbons. 

Aerosols are airborne particles within the 
atmosphere. Some aerosols, such as sulfate 
aerosols and black carbon aerosols are also 
produced by fossilfuelcombustion. Sulfate aerosols 
tend to reflect incoming solar radiation, cooling the 
Earth's surface. Black carbon aerosols absorb, 
rather than reflect, solar radiation, which shades the 
Earth's surface, but warms the atmosphere. 

DON'T WE NEED GREENHOUSE GASSES? 

The greenhouse effect is necessary for the planet to be 
warm enough to be livable. But there are concerns that an 
increasing accumulation of greenhouse gases are causing 
an increase in global temperatures. 



Greenhouse gases are central to the climate change debate. 
Visible light from the sun passes through the atmosphere 



During the past century, global surface temperatures have 
increased at a rate near 0.1 1 °F per decade. But this trend 



Environmental 
basicinfo.html 



Protection Agency, www.epa.gov/climatechange/ 



Pew Center on Climate Change, www.pewclimate.org/global-warming- 
basics/faq_s/glance_faq_science.cfm 



March 2008 



THE INTERIM 



14 



has increased to a rate approximately 0.32 °F per decade 
during the past 25 to 30 years. There have been two 
sustained periods of warming, one beginning around 1910 
and ending around 1945, and the most recent beginning 
about 1976.^ 

Since the beginning of this century, each year has ranl^ed 
among the 10 warmest years of the observational period 
ranging from 1850 to the present.* 

Temperatures have been increasing in Montana, too. The 
following table shows, for selected cities, the trends in the 
annual mean temperatures and total annual snowfall over 
the last half century. 



50 Year Trends in Mean Annual Temperature and Total Annual 
Snowfall, 1951-2004 


City 


Annual Mean 
Temperature (°F) 


Total Annual 
Snowfall (inches) 


Great Falls 


-0.15 


-6.3 ('51-04) 


Kalispell 


+0.85 


-6.9 ('51-98) 


Billings 


+1.44 


-10.7 ('51-04) 


Missoula 


+1.80 


-22.7 ('62-04) 


Bozeman 


+1.97 


-15.9 ('62-04) 



Source: The Montana Climate Office at http://climate.ntsg.umt.edu/ 

WHAT ARE THE CONTROVERSIES ABOUT CLIMATE 
CHANGE? 

Debates about climate change are scientific, economic, 
political, and rife with complexities. That said, major points of 
contention include what degree are human-produced 
greenhouse gases affecting the climate and what are those 
effects? 

A 2001 report prepared by the National Academy of 
Sciences at the request of President George W. Bush 
concluded, "Greenhouse gases are accumulating in Earth's 
atmosphere as a result of human activities, causing surface 
air temperatures and subsurface ocean temperatures to rise. 
Temperatures are, in fact, rising. The changes observed 
over the last several decades are likely mostly due to human 
activities, but we cannot rule out that some significant part of 
these changes is also a reflection of natural variability." * 



National Climatic Data Center, 2006, 
http://lwf.ncdc.noaa.gov/oa/climate/research/2006/ann/global.html 



World Meteorological Association, 2006. 
http://www.wmo.ch/pages/themes/wmoprod/documents/WMO_1016_E.pdf 



Citing the report, the president called for a reduction in the 
production of greenhouse gases. ^ 

Today, statements about human produced greenhouse 
gases affecting the climate are even stronger than those 
issued by the National Academy of Sciences in 2001 . This 
statement on the EPA website is reflective of others: 

"Scientists know with virtual certainty that: 

Human activities are changing the composition of 
Earth's atmosphere. Increasing levels of greenhouse 
gases like carbon dioxide (CO2) in the atmosphere 
since pre-industrial times are well-documented and 
understood. 

The atmospheric buildup of CO2 and other 
greenhouse gases is largely the result of human 
activities such as the burning of fossil fuels. 

The major greenhouse gases emitted by human 
activities remain in the atmosphere for periods 
ranging from decades to centuries. It is therefore 
virtually certain that atmospheric concentrations of 
greenhouse gases will continue to rise over the next 
few decades. 

Increasing greenhouse gas concentrations tend to 
warm the planet." 

A working group of the Intergovernmental Panel on Climate 
Change recently concluded, "Most of the observed increase 
in global average temperatures since the mid-20th century 
is very likely due to the observed increase in anthropogenic 
greenhouse gas concentrations.' 

"Discernible human influences now extend to other aspects 
of climate, including ocean warming, continental-average 
temperatures, temperature extremes and wind patterns." ' 

However, conclusions about climate change are not 



Presidential statement, 2001 . www.climatevision.gov/statements.html 



The World Meteorological Organization and the United Nations 
Environment Programme established the Intergovernmental Panel on 
Climate Change (IPCC) in 1988. Its role is to assess on a comprehensive, 
objective, open and transparent basis the scientific, technical and socio- 
economic information relevant to understanding the scientific basis of risk 
of human-induced climate change, its potential impacts and options for 
adaptation and mitigation. The IPCC does not carry out research nor does 
it monitor climate related data or other relevant parameters. It bases its 
assessment mainly on peer reviewed and published scientific/technical 
literature. 



Climate Change Science: An Analysis of Some Key Ouestions (2001) 
http://books.nap.edu/openbook.php?record_id=10139&page=1 



IPCC, 2007: Summary for Policymakers. In: Climate Change 2007: The 
Physical Science Basis. Contribution of Working Group I to the Fourth 
Assessment Report of the Intergovernmental Panel on Climate Change. 



March 2008 



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15 



unanimous. 

Richard S. Lindzen, a meteorology professor at the 
Massachusetts Institute of Technology, was a member of the 
panel that wrote the 2001 National Academy of Sciences 
report. At the time, he wrote that the summary passage 
quoted above was a "zinger" that overshadowed the report's 
caveats, mainly, according to Lindzen, "Our primary 
conclusion was that despite some knowledge and 
agreement, the science is by no means settled."^ 

At a 2005 conference on climate change at Yale University, 
Lindzen said there is basic agreement on three points:'" 

The global mean surface temperature is always 
changing. It has increased and decreased over the 
last 60 years. Over the last century, it has increased, 
meaning there has been some global warming. 



The validity of the models used in the IPCC working group 
report cited above also are criticized by the George C. 
Marshall Institute. "The models have systematic flaws, the 
input data is unreliable prior to 1 970 at the earliest, and the 
historical record of climate is incomplete and flawed."'^ 

WHAT ARE THE EFFECTS? 

Possible effects of climate change, according to an IPCC 
working group, include:'^ 

Less water available in mid and semi-arid low 
latitudes. 

More species at risk for extinction and increased 
risks for wildfire. 

A decrease in cereal productivity at low latitudes, an 
increase in higher latitudes. 



Carbon dioxide is a greenhouse gas and its increase 
should contribute to warming. It is increasing, and a 
doubling would increase the greenhouse effect 
(mainly due to water vapor and clouds) by about 2 
percent. 



Increased damage from floods and storms. 

A change in disease vectors, an increase in mortality 
due to heat waves, floods, and droughts, and other 
health problems. 



There is good evidence that humans are responsible 
for the recent increase in CO2, though climate itself 
(as well as other natural phenomena) can also 
cause changes in CO2. 

However, Lindzen contends that models used by the IPCC 
fail to correctly take into account the effect of water vapor 
and clouds. "Even if we attribute all warming over the past 
century to man made greenhouse gases (which we have no 
basis for doing), the observed warming is only about one- 
third to one-sixth of what models project," Lindzen said. 



For North America, the report said:'* 

Warming in western mountains is projected to cause 
decreased snowpack, more winter flooding, and 
reduced summer flows, increased competition for 
over-allocated water resources. 

Disturbances from pests, diseases, and fire are 
projected to have increasing impacts on forests, with 
an extended period of high fire risk and large 
increases in area burned. 



"At this point, it is doubtful that we are even dealing with a 
serious problem. If this is correct, then there is no policy 
addressing this non-problem that would be cost-effective," 
Lindzen said. "Even if we believe the problem to be serious, 
we have already reached the levels of climate forcing that 
have been claimed to be serious."" 



Wall street Journal, 2001. http://eaps.mit.edu/faculty/lindzen/OpEds/ 
LindzenWSJ.pdf 



Working Group (WG) I Contribution to the IPCC's Fourth Assessment 
Report (AR4): A Critique, 2007. www.marshall.org/pdf/materials/51 5.pdf. The 
Marshall Institute, established in 1 984 as a nonprofit corporation, conducts 
technical assessments of scientific issues with an impact on public policy. 
This is intended to be a critical examination of the scientific basis for global 
climate change policy. 



Global Warming: Looking Beyond Kyoto, Yale, 2005. 
http://www.ycsg.yale.edu/climate/forms/LindzenYaleMtg.pdf 



Working Group II Contribution to the Intergovernmental Panel on Climate 
Change Fourth Assessment Report, 2007. www.ipcc.ch/SPM13apr07.pdf 



'Ibid. 



Ibid. 



March 2008 



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16 



Moderate climate change in the early decades of the 
century is projected to increase aggregate yields of 
rain-fed agriculture by 5 percent to 20 percent, but 
with important variability among regions. Major 
challenges are projected for crops that are near the 
warm end of their suitable range or depend on 
highly utilized water resources. 

Cities that currently experience heat waves are 
expected to be further challenged by an increased 
number, intensity and duration of heatwaves during 
the course of the century, with potential for adverse 
health impacts. Elderly populations are most at risk. 

Coastal communities and habitats will be 
increasingly stressed by climate change impacts 
interacting with development and pollution. 
Population growth and the rising value of 
infrastructure in coastal areas increase vulnerability 
to climate variability and future climate change, with 
losses projected to increase if the intensity of 
tropical storms increases. Current adaptation is 
uneven and readiness for increased exposure is 
low. 

The Marshall Institute criticized the report for its modeling 
and use of worst-case scenarios that assumed nothing 
would be done to curb greenhouse gasses.^^ 

"This is an unrealistic assumption since a variety of actions 
are currently being taken to control greenhouse gas 
emissions, some voluntary, some mandatory, and those in 
the future will be shaped by new knowledge," the critique 
said. 

WHO IS DEALING WITH CLIMATE ISSUES? 

Various public and private organizations at the national, 
regional, state, and local levels are taking on climate change. 

The national climate change policy has three main goals:'* 

slowing the growth of emissions; 

strengthening science, technology, and institutions; 
and 

enhancing international cooperation. 

In 2002, the United States pledged to reduce the 
greenhouse gas intensity of the American economy by 18 



percent over the 10-year period from 2002 to 2012. 
Voluntary, public-private programs focus on energy 
efficiency, renewable energy, methane and other non-carbon 
dioxide gases, agricultural practices and implementation of 
technologies to achieve greenhouse gas reductions." 

Greenhouse gas emissions aren't restricted by the federal 
government; however, the U.S. Supreme Court ruled thatthe 
Environmental Protection Agency has failed to use its 
authority to regulate carbon in automobile exhaust as a 
pollutant. In the absence of federal laws on the subject of 
greenhouse gas emissions, states are forming individual and 
regional tracking and reductions programs. 

Montana is a member of the Western Regional Climate 
Action Initiative that also includes Arizona, California, New 
Mexico, Oregon, Utah, and Washington. The Canadian 
provinces of British Columbia and Manitoba also joined. 
States will identify, evaluate, and implement ways to reduce 
greenhouse gas emissions. The initiative requires an overall 
regional goal to reduce emissions. A market-based, 
multisector mechanism must be developed to achieve that 
reduction. Members also will participate in a greenhouse gas 
registry. 

The Regional Greenhouse Gas Initiative (RGGI) includes 
Connecticut, Delaware, Maine, Maryland, New Hampshire, 
New Jersey, New York, and Vermont. Starting in 2009, 
carbon emissions from power plants in those states will be 
capped at current levels-about 121 million metric tons 
annually. The cap remains until 2015 when the states then 
incrementally reduce emissions by 10 percent by 2019. It 
establishes the first cap-and-trade program for carbon 
dioxide. It is the first mandatory cap-and-trade program for 
emissions in the U.S.'* 

Thirty-one states, including Montana, are part of the Climate 
Registry, a national initiative to track greenhouse gas 
emissions. The registry, a nonprofitorganization, will be used 
to track, measure, verify, and publicly report greenhouse 
gases. The registry will accept data starting in 
January 2008. State agencies, corporations, and educational 
institutions will be invited to report emissions under the 
voluntary program. Some states also have specific sources 
and facilities that are required to report under regulatory 
programs. In Montana, facilities are not required to report 
carbon emissions, but the Montana Climate Change 
Advisory Committee reached agreement on a 
recommendation that a mandatory reporting program be 
designed. 



The Marshall Institute, 2007. Evaluating Working Group (WG) ll's 
Contribution to the IPCC's Fourth Assessment Report (AR4) 
www.marshall.org/pclf/materiais/526.pdf 



www.epa.gov/climatechange/policy/index.html 



'Ibid. 



Model Rule and Amended Memorandum of Understanding, Regional 
Greenhouse Gas 
Initiative. 



March 2008 



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17 



Thirty states, including IVIontana, Inave completed or are 
working on climate action plans. ^^ In 2006, the Western 
Governor's Association stated their support for local, state, 
regional, and national programs that would "reduce 
anthropogenic greenhouse gas emissions in a manner that 
is consistent with scientific research and will not significantly 
harm the U.S. economy."^" 

In the private sector, members of the American Petroleum 
Institute formed a climate challenge program to reduce 
greenhouse gas emissions. Companies are using 
cogeneration, also known as combined heat and power 
technology, to turn waste heat into energy and have been 
working around the world to reduce natural gas flaring, 
another source of greenhouse gas emissions. Companies 
also are researching alternative fuels and other 
technologies.^^ 

WHAT ABOUT IN MONTANA? 

Gov. Brian Schweitzer in 2005 asked Montana's Department 
of Environmental Quality to form a Climate Change Advisory 
Committee to study the impact of climate change in 
Montana. 

The Montana Climate Change Advisory Committee had 18 
members representing industry, environment, local and tribal 
governments, transportation, and agriculture. The DEQ 
contracted with the Center for Climate Strategies to develop 
a comprehensive inventory and forecast of greenhouse gas 
emissions in Montana from 1990 to 2020 as well as to 
develop policy options for reducing greenhouse emissions. 



The Center for Climate Strategies is a nonprofit organization 
that works with groups like the MCCAC to design and 
implement policies for climate mitigation. The organization 
has teamed with 1 5 other states to develop greenhouse gas 
reduction plans. 

The Environmental Quality Council decided to spend a large 
portion of this interim examining and debating the MCCAC 
recommendations. 

The mayors of Billings, Bozeman, and Missoula signed on to 
the U.S. Mayors Climate Protection Agreement, in which 
mayors commit to reduce emissions in their cities to 7 
percent below 1 990 levels by 201 2." 

The Big Sky Carbon Sequestration Project, led by Montana 
State University, is one of the U.S. Department of Energy's 
seven regional partnerships. Researchers are developing a 
framework to deal with carbon dioxide emissions and are 
working with stakeholders to create a "vision for a new, 
sustainable energy future."" 

The National Carbon Qffset Coalition, Inc." is made up of 
seven Montana nonprofit corporations. Itallows landowners, 
corporations, tribes, and state and local governments to 
participate in a market-based conservation program. The 
program is geared at reducing the impacts of greenhouse 
gases and explores the concept of transferring carbon 
sequestration units as a new commodity." 



Climate Change: Action by States to Address Greenhouse Gas 
Emissions, by Jonathan 
Ramseur, Congressional Research Service, January 2007, page 6. 



www.usmayors.org/climateprotection/ 



www.bigskyco2.org 



www.westgov.org/wga/press/plenary1-pr.htm 



www.ncoc.us 



www.api.org/ehs/climate/new/companiesaddress.cfm 



Sonja Nowakowski, legislative research analyst, contributed information 
to this section. 



March 2008 



THE INTERIM 



18 



^ 



1 



INTERIM CALENDAR 

UNLESS OTHERWISE SPECIFIED, ALL ROOM DESIGNATIONS ARE IN THE CAPITOL 



Sunday Monday 


Tuesday 


Wednesday 


Thursday 


Friday 


Saturday 


March 2008 




1 


2 


3 


4 

Fire Suppression 
Committee: 
Contractor subcom- 
mittee, Room 303 


5 


6 LFC: 

Subcommittee on 
budget and 
appropri-ations. 
Room 102 
Subcommittee on 
State Fund/ workers' 
comp. Room 152 

Legislative Finance 
Committee, Rm. 102, 


7 

Legislative Finance 
Committee, Room 
102, 8 a.m. 


8 


9 


10 

Environmentai 
Quaiity Councii, 
Room 102 


11 

Environmental 
Quality Council, 
Room 102 


12 

Water Policy 
Committee, Room 
172 

Education and Local 
Government Com.: 
HJR 22 dental study 
worl(group. Room 
102,9 a.m. 


13 

Water Policy 

Committee, Room 

172 

Education and Local 

Government 

Committee: 

K-12 Subcommittee, 

Room 137 

PEPB Subcom., 9 

a.m.. Room 102 


14 

Education and Local 
Government Com- 
mittee, 8:30 a.m.. 
Room 137 


15 


16 


17 

Chiidren, Families, 
Health, and Human 
Services and SJR 
15 study of health 
care delivery. Room 
137 


18 

Children, Families, 
Health, and Human 
Services, Room 137 


19 

Montana State 
University State 
Legislative Day 
Strand Union 
Building, MSU 
Campus, Bozeman, 
noon to 4 p.m 


20 


21 


22 


23 


24 


25 


26 


27 

Fire Suppression 
Committee: 
Wildiand-Urban 
Interface and 
Infrastructure sub- 
committees 


28 

Fire Suppression 
Committee, Room 
102 


29 


30 


31 

Legislative Council, 
Rules subcommittee 













March 2008 



THE INTERIM 



19 



Sunday Monday 


Tuesday 


Wednesday 


Thursday 


Friday 


Saturday 


April 2008 










1 


2 


3 


4 


5 






Legisiative Council 










6 1 7 


8 


9 


10 Law and Justice 


11 Aduit justice 


12 










Committee: 


worl<ing group. 












Aduit Justice 


Room 137 












worl(ing group, 10 














a.m.. Room 137 


Juvenile justice 












Juvenile Justice 


working group. 












worl<ing group, 10 


Room 102 












a.m.. Room 102 


Law and Justice 
Committee, 1 p.m. 




13 


14 


15 


16 


17 

Revenue and 
Transportation 
Committee: SJR 31 
subcommittee and 
HB 488 
subcommittee 


18 

Revenue and 

Transportation 

Committee 


19 


20 


21 


22 


23 


24 


25 


26 


27 1 28 


29 


30 










State Administration 


State Administration 












and Veterans' 


and Veterans' 












Affairs Committee 


Affairs Committee 












Fire Suppression 


Fire Suppression 












Committee, 


Committee, 












Hamiiton 


Hamiiton 











LEGISLATIVE SERVICES DIVISION 
PO BOX 201 706 
HELENA MT 59620-1706